Tip Credits for Hotel and Restaurant Workers

Federal law permits employers in certain industries such as hotels and restaurants to compensate their hourly employees based on a tip credit system. Examples of “tipped” employees include housekeeping staff, servers, hostesses, bussers, delivery drivers, and room service staff. Under this system, workers must still be paid at least the federal minimum wage of $7.25 per hour, but tips may be included as part of wages under certain circumstances. However, an employer must pay hourly employees at least $2.13 per hour and ensure that the employees’ tips are sufficient to meet the remainder of the minimum wage requirements. Otherwise, an employer is required to “make up the difference” in minimum wages to the employee. 

Some restaurants and hotels also charge “service charge” fees to guests and customers, which are sometimes mistaken for tip charges to be passed on to hourly employees when in fact they are not passed on to the hourly employees, thus resulting in a zero tip situation for employees subject to tip credits.

Additionally, some hourly “tipped” employees are required to perform tasks which do not fall under the typical job duties of a “tipped” employee.  These tasks can include food preparation, rolling silverware, cleaning the kitchen, making boxes/take-out containers, or stocking shelves or fridges. If a “tipped” employee performs tasks which are not traditionally performed by those employees, they must receive minimum wage (and overtime, if applicable) for that time, not subject to the tip credit system. 

If you are currently working at a hotel or restaurant as an hourly employee eligible for tip credits, and you have performed uncompensated off-the-clock tasks, performed tasks which are not “tippable,” or received pay (including tips) that was below the minimum wage, please contact our firm immediately. 

You can contact us by completing the form on this page or by calling us at (816) 714-7100. Please reference that you are contacting us regarding the Hotel and Restaurant Employee Investigation.

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